Questions to ask attorneys

10 Replies

So I’m looking to start my investing journey soon but I want to find a good attorney that deals with investors but just don’t know what to ask when I talk to one. I’m looking at buying and holding or fix and flipping just need an attorney for the closing process mainly. Wanting to know what questions to ask to sound more professional and prepared?

Hi Ivan,

This is the list of questions we used when we interviewed several attorney.  We got some of these just by googling what you asked.  Good luck in your investing

Questions for Attorney

Cost Structure

  • Hourly
  • per contract price
  • Do you have pre-made/generic contract packets for real estate and construction? Things like subcontractor agreement, non-compete regarding subs or investment partners, lien release, general run of the mill type activities. Given the cost per contract how many contracts should we expect to need to properly run our companies in our first year or 2?
  • Do you have a basic setup/contracts for Joint Venture agreements as they pertain to flips?
  • Do you have examples/list of needed contracts for General Contracting and Real Estate?
  • Do you ever require a retainer?

Types of clients/Specialties

Do you have other Real Estate Investors

Who will work on our business

Do you handle litigation

What form of communications do you prefer

What is your opinion on wholesaling/back to back closings?

  • Some attorneys don’t like to do these. We understand that they are a legal grey area. What is your opinion on them? If legal, how do we ensure we aren’t doing anything that would be considered illegal or unethical?

Do you do closings/real estate transactions

If not, can you suggest one?

Funding Questions

  • Based on your experience are there any pitfalls or concerns to watch out for when dealing with private lenders?

  • Have you ever heard of retirees using their IRA as collateral for business loans/lines of credit? And what are the risks using an IRA as collateral besides the obvious financial risk? Does this pierce the veil and open me up to being sued where my IRA is also at risk?

Structure Questions

  • For multiple partners in an LLC in the event one passes away how can it be ensured the company passes completely to the other partner and won't go into probate? (Joint ownership with the right of survivorship?)
  • If some partners individually buy properties or buy with other parties, how should this be structured? Will they need another LLC/entity setup? If so, should they do this ahead of time or wait to see the deal that is available?
  • What type of insurances should we carry for each of the different companies
    • Investment company
    • GC (Limited liability
    • Brokerage

Moving properties into an LLC questions ie. quit-claim, refi, sale to self

What, if any issue, would putting the properties into an LLC or LLCs by Quit Claim Deed have for taxes. Would there be any negative or financial implications? We are aware of the Due On Sale Clause with the banks. We are being told by many that this clause is not really something to be overly concerned with.

Would the County consider moving the deeds from a personal name to an LLC a sale of the property and require some sort of tax to be paid on the transaction. Would there be any other negative outcomes? Since these are currently in my name would I end up paying taxes for capital gains or similar? The 3 options of moving we have considered to move the deeds into an LLC are Quit Claim, refi and sale of the property to ourselves

Due on Sale Clause?

Overarching LLC Question

Would it be good to have completely separate LLCs for each property or an overarching LLC with multiple LLCs under it.

Do 5-10 per LLC

Basic setup and Structure Questions

If we follow through and set up multiple new LLCs how would they be taxed? For example if we start a new construction entity would it be an LLC, Corp, etc and would it be an s-corp also?

Is there any negative outcome to changing the name of an established LLC? Tax wise or hindering our ability to acquire financing in that LLCs new name? Would changing the name impact our bank account requiring we open a new account?

General Questions

General Question - This especially applies to the GC side of things, but how do we handle paying contractors that can not be 1099? I’m not trying to build a house without it, but the occasional small job would be great. Is there a limit to it, or total to each contractor paid we would likely need to stay under each year and how would we label these expenditures come tax season? Should I be keeping petty cash on hand to facilitate these scenarios?

@Ivan Casale

Are you buying in a state that requires an attorney to close?
Some states allow closing via title company. It may be cheaper to close with a title company.

In general, you want to make sure you have proper title insurance when you purchase the property.

don't worry about sounding professional - I would just worry about having your concerns addressed.

If you are 'fix and flipping', you will likely be dealing with employees/independent contractors. Make sure that you are properly protected with the work that they do.

@ivan Casale I missed the fact that you were asking about closing attorneys. But if you are going to run a business a business attorney is a good idea. You will need contracts developed or reviewed for contractors, joint ventures, out of the box financing and evictions.  I keep my closing attorney and business attorney separate. A business is always at risk. Just consider a business attorney another form of insurance.